Iran–European Union relations

Iranian–European Union relations have been strained in the early 2010s by the dispute over the Iranian nuclear program. The European Union along with United States have imposed sanctions against Iran over the controversies around Iranian nuclear program. These sanctions which have been described as the toughest EU sanctions imposed against any other country by European officials were last strengthened on 15 October 2012 within by the EU Council.[1][2]

In 2003, it was discovered by the International Atomic Energy Agency (IAEA) that Iran is conducting secret activities with nuclear materials. Iran’s refusal to cooperate proactively with the IAEA and its resistance to report to the United Nations Security Council (UNSC) led to a diplomatic effort by the European council and its three members France, Germany and the United Kingdom to resolve this issue through negotiations. They were joined in 2004 by the EU High Representative, and thus offering support by all EU members. Subsequently in 2005 and 2006, extensive proposals to facilitate peaceful nuclear energy usage were again presented to the Iranian authorities. Even with the support of China, Russia and the United States through these proposals, Iran could not be convinced to follow the requests by the IAEA. As a result, four resolutions (N° 1696, 1737, 1747 and 1803) were put in place by the United Nations Security Council: they demanded to suspend all Uranium-235 enrichment and heavy water activities and restricted acquisition of nuclear and ballistic materials by Iran. Those policies were reiterated in 2008 by the EU.[3]

The continuing refusal by Iranian authority to make clear declarations and to allow sufficient inspections of their nuclear facilities then convinced the EU to enforce additional sanctions on civilian goods and services such as financial activities and energy sector technologies. In 2012, an oil embargo and restrictive financial boycotts were enforced by the EU, in addition to UN sanctions against Iran. It was not until December 8, 2013, when Iranian authorities based on a historic deal reached in Geneva on November 24, 2013 with the so-called P5+1 group (Britain, China, France, Russia, the United States, and Germany)[4] allowed UN nuclear inspectors to visit a heavy water facility after announcing that plutonium enrichment has been suspended.[5] The deal will put Uranium enrichment by Iran on hold for at least eight months, and is paving the way for direct talks between the US and the Islamic Republic. Additionally, Iran is required to dilute existing enriched Uranium stockpiles to a concentration of 20%. While the economic boycotts and material restriction are still in place, a step by step reduction of these embargoes by the EU will likely be implemented.

On 23 January 2012, the Council of the European Union released a report in which it restated its concerns about the growth and nature of Iran's nuclear programme.[7] As a result, the Council announced that it would levy an embargo on Iranian oil exports. Further, it stated that it would also freeze assets held by the Central Bank of Iran and forestall the trading of precious metals and petrochemicals to and from the country.[8] This replaces and updates the previous Council Regulation 423/2007 that was published on 27 July 2010. The new sanctions put restrictions on foreign trade, financial services, energy sectors and technologies and includes a ban on the provision of insurance and reinsurance by EU insurers to the State of Iran and Iranian owned companies.[9] Iran has since declared its intentions to close the Strait of Hormuz should the embargo be enacted.[10] At the time, the European Union accounted for 20% of Iran's oil exports, with the majority of the remaining being exported to Asian countries such as China, Japan, India, and South Korea.[11] Current oil contracts will be allowed to run until July 2012.[12]

In response to the sanctions, Ramin Mehmanparast, representative for Iran's foreign ministry, stated that the embargo would not significantly affect Iranian oil revenues. He further said that "any country that deprives itself from Iran's energy market, will soon see that it has been replaced by others."[13]

In addition, Iran's parliament is considering a law that would pre-empt the EU ban by cutting off shipments to Europe immediately, before European countries can arrange alternate supplies.[14]

On 17 March 2012, following agreement two days earlier between all 27 member states of the Council of the European Union, and the Council's subsequent ruling, the SWIFT electronic banking network, the world hub of electronic financial transactions, disconnected all Iranian banks from its international network that had been identified as institutions in breach of current EU sanctions, and that further Iranian financial institutions could be disconnected from its network.[1]

In 2008 Iranian exports to the EU amounted to €11.3 billion and imports from the EU amounted to €14.1 billion. EU exports to Iran are mainly machinery and transport (54.6%), manufactured goods (16.9%) and chemicals (12.1%).[15] In 2011, Iran ranked 7th in exporting crude oil to Europe and a Eurostat report stated that 27 European states imported 11.4 billion Euros of goods from Iran in the first nine months of 2011.[16] There is significant room for growth, though this is hampered by the nuclear dispute. A Trade and Cooperation Agreement was installed in 2002 but has been on hold since 2005 because of the dispute. There are no bilateral treaties as Iran is not a member of the WTO.[15]

European sanctions do not affect Iran's electricity exports, which creates a loophole for Iran's natural gas reserves.[17]

Controversies have arisen among the international community. On 18 January 2012 Russia stated that it would consider direct threats to security to include acts of war against Iran, given its proximity to Russian territory .[18] On 18 January, Foreign MinisterSergey Lavrov, on behalf of Russia, warned that an attack on Iran would cause a catastrophe. He stated the sanctions are aimed at strangling the economy of Iran and that it would create much discontent toward Western nations, and potentially provoke a negative recourse. If actions to reduce the threat of nuclear war are taken, they should not include provoking counterparts to a potential conflict.[19]

Further argument includes the fact that sufficient evidence does not exist to make a fair determination on the existence of nuclear weapon development in Iran, raising questions as to the warrant of sanctions. Since releasing a report in November 2011, the International Atomic Energy Agency has thus not found any evidence to the existence on nuclear weapons in Iran.[20] With this, speculation has arisen as to whether western nations are continuing on the same path that was taken with Iraq – entering into another period of war on presumptions of weapons of mass destruction that have thus far not been evidenced to exist.[21] If this were the case, claims toward nuclear weapons could be another attempt at maintaining control of oil interests.[22] On 24 January, during his 2012 State of the Union Address, President Barack Obama threatened Iran, saying "America is determined to prevent Iran from getting a nuclear weapon, and I will take no options off the table to achieve that goal". He also made calls to peace, by saying "... a peaceful resolution of this issue is still possible, and far better, and if Iran changes course and meets its obligations, it can rejoin the community of nations".[23] The American Congress reacted cheerfully to those threats and gave a cold reception to these peace advances.[24] Ardeshir Ommani, Iranian President of the American Iranian Friendship Committee reacted to those comments explaining that US sanctions are designed to harm the Iranian people and calling the isolation of Iran in the international community a "myth".[25]